New auto insurance legislation restricts right to sue, critics say

The Ontario Trial Lawyers Association says the devil is in the details of legislation designed to reduce auto insurance premiums and tackle fraud

New auto insurance legislation restricts right to sue, critics say

Victor Biro / Toronto Star file photo

The Fighting Fraud and Reducing Automobile Rates Act passed Thursday but the Ontario Trial Lawyers Association says the legislation removes a motorist’s right to sue an insurance company for denying their claims.

The Ontario Trial Lawyers Association says the devil is in the details of legislation designed to reduce auto insurance premiums and tackle fraud.

The Fighting Fraud and Reducing Automobile Rates Act passed Thursday but Steve Rastin, president of the OTLA, noted there’s a clause buried in the legislation that removes a motorist’s right to sue an insurance company for denying their claims.

Bill 15 doesn’t actually mention an earlier 15 per cent reduction that was spelled out in the 2013 budget.

“We are profoundly disappointed in the government for what they did today,” Rastin said, noting the government has replaced the right to sue for denied claims with a convoluted arbitration system that, he claims, will be both costly and time consuming.

Rastin said while the association supports most of what is included in the bill, it finds the removal of the right to sue, and reducing the interest rates that injured claimants get on their money from insurance companies — which is kept in a reserve account — from 5 per cent to 1.3 per cent as completely unacceptable.

“The legislation says it’s all about fraud and fighting costs. There is a lot more in there than that that’s been added to it. The legislation ends the right of an accident victim to sue the insurance company in the courts for not paying for benefits,” Rastin said.

Finance Minister Charles Sousa first promised the 15 per cent reduction in August 2013 when the New Democrats made that a condition of supporting the then-minority Liberal government’s budget earlier that year.

As it turned out the NDP voted against the bill Thursday for many of the reasons cited by the trail lawyers, including the fact the reduction in premiums is taking too long. From August 2013 to this August the premiums dropped by an average of only 6 per cent.

“Everyone — including the insurance industry — is in agreement on one thing: auto insurance in Ontario is far too expensive. We realize the financial hardship it can create for vehicle owners, particularly young people and those in northern and remote communities . . . now we have an opportunity to begin fixing the system once and for all,” Palumbo said.

Toronto Star

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(5) Comment

By Griswald|NOVEMBER 23, 2014 04:15 PM

Why is it that every time the IBC and their member insurance companies ask for something, anything, it seems our government can't bend over fast enough and deliver the changes quick enough? Changes that only hurt accident victims while making insurance companies even richer. A dirty business propped up by our own government and that harms the injured and vulnerable.

Fighting fraud means turning an eye on the fraudulent behavior of Ontario's insurers who turn down half of the claims they get. 20,000+ injured people EVERY year can't get the coverage they paid for because their insurance company won't stand behind their contract. They take your money and run when you need them. If that isn't fraud, I don't know what is. Now the government just opened the door to more denials by making insurers even less accountable with a lower interest rate. Why do we keep this corrupt industry going - makes no sense because when insurers don't pay, the taxpayer does. Bad business, hand in hand with bad governance.

There is a reason some of the most profitable companies in Canada are insurance companies and banks.................The government has legalized their illegal activities for decades and seems the status quo continues

The government is doing nothing more than protecting the very companies which fund their campains and line their pockets and doing at the cost of innocent taxpaying citizens who are FORCED to purchase insurance. Any outside insurers who want to enter this market are either forced to keep the status quo or forced out of the market all together.............

So if you have no ability to SUE your insurer for NOT abiding by the contract you have completely lost your appeal process. So basically if for what ever reason an insurer doesn't want to pay you they simply say "Your NOT covered", and you can't do anything about it. What a wonderful gift for our government to give citizens. Not only do insurance companies hold you hostage with their high fee's, you now have NO recourse to protect/defend yourself against extortion..................Not only has the government legalized an insurance monopoly companies and allowed them to demand astronomical premiums, you have now strengthened their ability to extort us aswell...........